California Supreme Court Affirms Strong Protection for Attorney-Client Privilege

The attorney-client privilege protects confidential communications between clients and attorneys.  It is a vital legal doctrine that is designed to foster open and frank dialogue without fear that third parties will later be able to discover the conversation, discussion or written exchange of information between the lawyer and the client.  In Costco Wholesale Corp. v. Superior Court, the California Supreme Court affirmed that this privilege protects legal advice that lawyers give to clients when they are asked to investigate potential liability for employment related matters.  In the Costco case, a corporate client (Costco) asked its outside counsel to investigate and report on the potential liability to employees who asserted the right to overtime compensation.  The attorneys took on the assignment, interviewed relevant employees examined various corporate documents, and reported their findings in an extensive letter.  In their opinion letter, the attorneys included references to what was said by the employee witnesses and what was contained various corporate documents.  When later class action litigation arose between the employees and Costco, the employees’ lawyer attempted to discover the attorney’s letter.  Costco objected, claiming the letter was protected by the attorney-client privilege.  Plaintiffs persisted, contending that only the legal advice was protected – not the portions of the letter that summarized witness statements or corporate documents.  The trial court ordered that the letter be produced to the court so it could be inspected in order to determine if it was entitled to be protected by the attorney-client privilege.  The California Supreme Court held that the inspection was in error.  The court noted that under the California Evidence Code (section 915), it is improper to order disclosure of attorney- client communications in order to determine if they are privileged.  What the court must do, instead, is analyze the surrounding facts to determine if the letter was sent as a confidential communication between attorney and client in order to provide legal advice.  If so, the letter is privileged and exempt from disclosure.    The court’s opinion is a strong reaffirmation of the attorney-client privilege. A copy is attached for your convenience.  If you would like further advice in this area, feel free to contact our office.